{"id":23460,"date":"2020-10-03T08:00:42","date_gmt":"2020-10-03T08:00:42","guid":{"rendered":"https:\/\/www.ceo-na.com\/?p=23460"},"modified":"2020-10-02T18:45:33","modified_gmt":"2020-10-02T18:45:33","slug":"when-the-heir-apparent-is-the-wrong-choice-for-ceo","status":"publish","type":"post","link":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/business\/management-leadership\/when-the-heir-apparent-is-the-wrong-choice-for-ceo\/","title":{"rendered":"When the heir apparent is the wrong choice for CEO"},"content":{"rendered":"
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Even well-suited candidates may not even make it into the shortlist of succession\u2014and ghSMART studied the reasons why this can happen.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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By<\/strong><\/em> Elena Lytkina Botelho and Shoma Chatterjee**<\/p>\n

Large companies devote plenty of attention and resources to succession planning, yet a ghSMART study<\/a> finds that $112 billion in shareholder value is lost annually because companies pick the wrong people to lead them.<\/p>\n

In our CEO transition work across a wide range of industries, we found that in more than half of the 110 cases our firm assisted with during the last two years, the \u201cobvious\u201d choice was not the candidate most likely to succeed in the CEO role. Nearly three-quarters of the directors responding to the National Association of Corporate Directors\u2019 latest corporate governance survey say that maintaining the CEO pipeline is their top succession planning challenge. Yet we find that even at the most respected companies with disciplined succession processes in place, well-suited candidates may not even make it into the shortlist of succession candidates\u2014overshadowed by \u201csafe\u201d or \u201cchosen\u201d ones. We have identified three reasons why this can happen.<\/p>\n

The power of the apparent heir<\/h1>\n
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In an orderly process to replace a respected CEO, the incumbent typically holds disproportionate influence over the choice of a successor. Successors who rise to the top in these situations are often loyal deputies who have faithfully carried out the incumbent CEO\u2019s agenda. While it\u2019s reasonable to assume that the incumbent CEO has deep knowledge of his or her team, it\u2019s equally important to remember that even the best CEO can, due to her own sense of loyalty, overestimate the capabilities of trusted individuals.<\/p>\n

Likability counts more than it should<\/h1>\n
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Our 10-year CEO Genome study across 2,600 leaders found that the qualities that help one look the part and advance in corporate hierarchy are often at odds with what it actually takes to deliver results in the CEO role. This echoes the findings of Steven Kaplan at the University of Chicago, whose research shows that likable executives are more apt to get selected for C-suite roles even though they demonstrate no advantage in performance. On the other hand, we found that while highly decisive executives are 12 times more likely to excel as CEOs, they\u2019re also more likely to ruffle feathers on their way up the ranks. These are the candidates whose performance reviews may include such assessments as \u201clacks enterprise view,\u201d \u201cdoesn\u2019t play nice in the sandbox,\u201d and \u201cneeds to soften her approach.\u201d<\/p>\n

The safe choice can be irresistible<\/h1>\n
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Many companies we advise have a transformational strategic agenda, but when faced with the pressures of selecting the next CEO, their boards look past candidates who break the mold and opt for a seemingly \u201csafe choice\u201d\u2014which can lead to disappointing results. These boards tend to prioritize candidates who closely resemble their own backgrounds and those of the existing leadership team. As a result, both diversity and results suffer. For example, our research shows that women are 28% less likely to get selected for CEO roles and that having a significant accent made one 12 times less likely to get picked for the job. We suggest three tactics that can help avoid these costly traps and increase the odds of selecting the best candidate.<\/p>\n

A CEO scoreboard linked to business strategy<\/h1>\n
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While every company presents a unique set of challenges and opportunities that the next CEO must harness, most CEO specs list a similar set of generic qualities like \u201cstrong leader,\u201d \u201csense of urgency,\u201d and \u201cstrategic.\u201d Before comparing candidates, it is essential to articulate five to seven top priority outcomes and key leadership capabilities required for the next CEO to deliver in the specific business and organizational context. Even the best boards often struggle with this exercise, because it requires alignment on difficult strategic trade-offs amid uncertainty. Furthermore, translating what the next CEO needs to get done into a robust, measurable set of leadership behaviors and competencies requires an analytical process far beyond the level of conversation that typically takes place in boardrooms.<\/p>\n

A broader deeper lens on the leadership bench<\/h1>\n
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Most boards focus on the shortlist of candidates identified by the incumbent CEO and get only a carefully curated view on the broader team. Even in cases when board members get to know a wide range of executives over a long period of time, this familiarity often gives directors a false sense of comfort\u2014particularly when they don\u2019t have access to robust data that can help predict future performance. We\u2019ve seen a conversation on the corporate jet raise the stock of a weaker candidate and a misinterpreted remark over dinner plant doubts about an otherwise highly capable executive.<\/p>\n

Once board members form a point of view on candidates based on casual exposure, it is often hard to change. To pre- vent this, succession planning best practice includes an objective assessment of a broad slate of leaders (often over a dozen), starting five years ahead of the likely succession and updated annually. Our CEO Genome research demonstrated that leaders who are highly decisive, adaptable, and reliable and who prioritize results over being liked are more likely to become successful CEOs, so we suggest assessing for and developing these characteristics starting well in advance of the potential succession event.<\/p>\n

Trusted agitators<\/h1>\n
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There is ample research to show that diversity, when harnessed properly, can improve corporate performance. In cases of CEO succession, a board with diversity of thought, backgrounds, and traits benefits the organization by staving off groupthink and increasing the breadth of perspectives. Constructing a quality board is about the caliber and perspective of individual directors as well as the deliberate rules of engagement that allow for productive debate and effective decision making.<\/p>\n

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One board chair, for example, led directors in examining their own pre-existing biases and preferences before launching a discussion of succession candidates. Recognizing the complex dynamics and risks involved in succession, boards increasingly engage outside experts three to five years ahead of CEO transitions to provide objective assessment and development of potential candidates, help stimulate necessary discussions, and bring external best practices.<\/p>\n

The succession process enhancements we recommend here may be uncomfortable and time-consuming, but they help ensure that the right candidates don\u2019t get overshadowed by the \u201csafe\u201d ones. As the chair of a succession committee recently reminded his board:<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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\u201cWe\u2019ve worked very hard for the last few years to execute this process smoothly. It\u2019s worth reminding ourselves that shareholders will judge us on the outcome\u2014did we pick the right person to run this company?\u2014not on how good we felt about our discussions to get there.\u201d<\/p>\n<\/div>\n<\/div>\n

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**Elena Lytkina Botelho is a partner at ghSMART, advising leading CEOs and boards, a coauthor<\/em><\/strong>
\nof the New York Times and Wall Street Journal bestseller The CEO Next Door, and co-leader of the CEO Genome Project.<\/em><\/strong><\/p>\n

**Shoma Chatterjee Hayden heads the ghSMART\u2019s Leadership Development and Coaching practice. She focuses on advising executives in asset management, financial services, and private equity firms on scaling their leadership impact as they take on larger roles within an organization.<\/em><\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Even well-suited candidates may not even make it into the […]<\/p>\n","protected":false},"author":8,"featured_media":23461,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[43,1337],"tags":[2855,2425,99,2856,1385,2854,2853],"class_list":["post-23460","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-management-leadership","category-primezone","tag-business-strategy","tag-candidates","tag-ceo","tag-ceo-challenges-and-opportunities","tag-ceo-northam","tag-ceo-succession","tag-succession"],"_links":{"self":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/23460","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/comments?post=23460"}],"version-history":[{"count":3,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/23460\/revisions"}],"predecessor-version":[{"id":23794,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/23460\/revisions\/23794"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/media\/23461"}],"wp:attachment":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/media?parent=23460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/categories?post=23460"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/tags?post=23460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}